The software developer may chose Dhawan's successor from a possible list of three candidates selected by Chairman Ravi Venkateshan, who is spearheading the search.
Microsoft may announce a successor in the next 15 days, sources said, noting that while Doug Hauer was elevated as chief operating officer (COO) of Microsoft India, the company would prefer someone with a deep understanding of the Indian market to replace Dhawan. Besides, Hauer has returned to the US. The company's spokesperson declined to comment
Dhawan's exit is the second high-profile departure this month - the first being that of Rajan Anandan, who will be returning to the US to pursue plans outside Dell. Sameer Garde would be its new country general manager.
The software behemoth is also searching candidates among overseas and local information technology companies, including IBM, HP, HCL Technologies and Wipro Technologies.
Candidates from non-IT fields may not be considered since the successor will need a deep understanding of the Indian hardware, software and e-governance segments. Besides, Venkateshan was from a non-IT background, a former Cummins India man.
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Neelam Dhawan's exit from Microsoft comes amid India and three other countries' opposition to International Organisation for Standardisation's decision to declare software developers Office Open XML (OOXML) file format as an international standard.
The refusal from India to accept the standard could make it difficult for Microsoft to get government business since governments worldwide, including India, prefer standards and are wary of holding digital data in proprietary formats, which could make them hostage to a software vendor.
States, such as Kerala and others from the north-east, are heavy adopters of ODF file formats, which are open and free (excluding maintenance and support).
Microsoft's headcount in India, including its Hyderabad campus and Bangalore, is in excess of 5,000.